Publications

In an ETS, covered entities may receive allowances for free from the government or buy them in auctions. Learn about how governments decide to distribute allowances, why allocation matters, the pros and cons of each allocation method, how free allocation can work, and the approaches taken by systems around the world.

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Auctioning allowances in an emissions trading system generates revenues that can be used for various purposes. Learn how much jurisdictions receive in revenues, and the different ways it can be used – from supporting disadvantaged groups, funding further climate action, or contributing to the public budget.

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Understand how the use of offset credits, which represent emissions reductions from projects outside the scope of an ETS, provides an additional source of low-cost abatement options and flexibility for covered entities, issues of environmental integrity, and approaches taken by systems around the world.

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Banking and borrowing are key levers that enable a degree of temporal flexibility within emissions trading system. Understand how they work, risks associated with each and restrictions that may be imposed, and which jurisdictions allow either mechanism.

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ETS works by capping the total emissions allowed within the system. With a carbon tax, the government sets a tax rate and entities covered by the tax must pay this amount for every tonne they emit. Understand what these carbon pricing instruments have in common, how they differ, and which contexts might suit one over the other.

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Check out the 2023 ICAP Status Report with the latest developments in emissions trading around the world.

The report includes:
🔹 comprehensive snapshot of the latest ETS developments
🔹 up-to-date factsheets on all systems
🔹 infographics that visualize the systems' characteristics
🔹 in-depth articles from policymakers and carbon market experts

This report explores how CCS is treated in different ETSs around the world; if and how ETSs could play a role in incentivizing the development and deployment of CCS applications; and the challenges and opportunities in developing the required regulation in this context.

As market-based instruments, emissions trading systems are inherently flexible, as entities can decide to reduce their own emissions or buy emissions allowances from the market. Carbon offsets (or simply ‘offsets’) are a tool to further increase flexibility in reaching climate targets under ETSs, as they offer sectoral and geographical flexibility for jurisdictions to reduce greenhouse gas emissions outside of the scope of their ETS. This report …

Benchmarking can protect against carbon leakage while setting incentives to reduce emissions, but their design entails complex trade-offs. This paper explores benchmark-based industrial allocation design and experiences, using insights from existing ETSs, and their implications for abatement and low-carbon investment incentives.

Check out the 2022 ICAP Status Report with the latest developments in emissions trading around the world.

The report includes:
- Insights from policymakers and carbon market experts
- Infographics
- Factsheets on each system in operation, under development and under consideration